The United Arab Emirates has officially enacted Federal Decree-Law No. 11 of 2024, a significant piece of legislation aimed at reducing the effects of climate change. This law mandates greenhouse gas (GHG) emissions monitoring and reduction across all sectors, aligning with the UAE's commitment to achieving net-zero emissions by 2050 and its obligations under the Paris Agreement.

Key Takeaways

• Mandatory GHG emissions monitoring, reporting, and management for all entities.
• Focus on emissions reduction, climate adaptation, and fostering green innovation.
• Establishment of a National Carbon Registry for emissions tracking and trading.
• Penalties for non-compliance, alongside opportunities for cost savings and enhanced reputation.

Driving National Sustainability Goals

The new law, effective May 30, 2025, requires businesses, including those in free zones, to measure, track, and manage their carbon emissions. This initiative is designed to support national sustainability objectives and enforce compliance with carbon neutrality targets. Companies will need to implement emission reduction strategies and adhere to periodically updated national and sectoral goals. The law emphasizes mitigation, innovation, adaptation, data sharing, and sustainable development, aligning climate strategy with economic diversification.

Regulatory Requirements and Compliance

Entities with annual GHG inventories exceeding 0.5 million metric tons of CO₂e for Scope 1 and 2 emissions are mandated to report their emissions, reductions, and progress on reduction plans. Businesses must establish a GHG Emissions Monitoring and Reporting System, fostering the development of management systems aligned with international standards like the GHG Protocol and ISO 14064. While reporting Scope 1 and 2 emissions is mandatory, the intention is to eventually include Scope 3 emissions. Companies are encouraged to develop decarbonization strategies and set science-based emission reduction targets in line with the UAE's 2050 Net Zero Target.

Carbon Trading and Sector-Specific Targets

The establishment of a National Carbon Registry, in accordance with Article 6 of the Paris Agreement, allows organizations to register their emission reductions and engage in carbon trading. This provides an avenue for revenue generation and supports decarbonization efforts. High-emitting entities can offset emissions by purchasing verified carbon credits. Starting in 2026, industry-specific emission targets will be implemented for key sectors such as Oil and Gas, Petrochemicals, Energy and Utilities, Mining, Steel, and Cement, driving measurable progress across the economy.

Impact and Opportunities for Businesses

Proactive alignment with the law can unlock multiple benefits for companies, including cost savings through energy efficiency, access to green financing, and a strengthened brand reputation. Integrating climate considerations into business models will better position organizations to navigate future regulatory shifts and reduce transition risks. Conversely, non-compliance can result in administrative fines and penalties, with potential fines reaching up to 2 million AED for repeated violations. Delays in adopting low-emission practices also pose broader financial and operational risks, including increased capital costs and reduced competitiveness.

A Bold Leap Toward Regional Leadership

Greenpeace MENA has lauded the legislation as a historic milestone, making the UAE the first in the MENA region to establish a legal framework for climate resilience and emissions accountability. The law is seen as a significant step toward a more climate-resilient and sustainable future, positioning the UAE as a leading voice for climate governance in the region. The success of the law will be measured by its ability to translate this legal milestone into deep, measurable emissions cuts and a just transition.

Sources

• Understanding the UAE’s Climate Change Reduction Law, KPMG.
• How UAE is transforming the climate landscape through legislative action | EY, EY.
• Navigating UAE’s Federal Climate Law, Crowe.
• Understanding the New UAE Climate Law, Anthesis Group.
• Greenpeace MENA: UAE’s Landmark Climate Law Takes Effect, Marking A Bold Leap Toward Regional Climate
  Leadership - Greenpeace Middle East and North Africa, www.greenpeace.org.

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